Investors looking to parse through the sell-off should look for stocks that can weather an economic downturn and are now more attractively valued, according to Citi. Major averages have been under pressure after a series of weak U.S. economic data sparked concerns of an impending recession. The unwinding of the Japanese yen’s carry trade further fueled the decline — which culminated on Monday with the Dow Jones Industrial Average and S&P 500 posting their biggest one-day losses in about two years. With that in mind, Citi has compiled a “post-dip shopping list” that includes stocks that meet the following criteria: The stocks are in the top 500 of the Russell 1000 by market cap Each stock’s implied growth outlook has improved and is now neutral or positive Earnings estimates for 2024 and 2025 are forecast to change by no more than 5%, according to Citi research Each stock has a Buy rating. iPhone maker Apple has made the Citi list. Shares are up more than 10% for 2024 but have fallen more than 6% in the past month amid pressure in the broader technology sector. Apple also suffered a setback this week after Warren Buffett’s Berkshire Hathaway announced it cut its stake in the company by nearly half in the second quarter. Certainly, several analysts see this as a buying opportunity. AAPL YTD Mountain Apple Stock. Caterpillar also made the cut. The construction equipment maker is up more than 12% for 2024. Shares got a boost on Tuesday after stronger-than-expected second-quarter results, rising 3%. Certainly, analysts are lukewarm on the stock’s prospects. The consensus rating on the shares is hold, and the average price target suggests limited upside, according to LSEG. Home Depot is another name that made the cut. The home improvement stock has underperformed the broader market in 2024 as higher interest rates have curbed demand for larger projects and expensive items. Shares are flat year-to-date. But with traders largely anticipating a nearly 62% chance of a rate cut at the September FOMC meeting, Home Depot could benefit from a surge in consumer mortgage refinancing if rates fall. HD YTD Mountain Home Depot stock. Other stocks on the list include Devon Energy and Zscaler.
